Tuesday, July 26, 2011

California approves use tax table for 2011

The California State Board of Equalization voted today to approve the use tax table to be used for 2011 tax returns. Senate Bill 86 (Ch. 11-14) allows taxpayers to report use tax for single nonbusiness purchases of $1,000 or less each on their FTB return using either:
  • The actual amount of tax due; or
  • The amount shown on a lookup table, which would indicate an estimated amount of use tax due based on the person’s AGI.
The table approved today provides as follows:

Adjusted Gross Income Range - Use Tax Liability

Less than $20,000 - $7

$20,000 - $39,999 - $21

$40,000 - $59,999 - $35

$60,000 - $79,999 - $49

$80,000 - $99,999 - $63

$100,000 - $149,999 - $88

$150,000 - $199,999 - $123

More than $199,999 - Multiply AGI by 0.07% (0.0007)

Sunday, July 17, 2011

The 8 Most Annoying Fees

I am surprised bank charges don't make the list. Bank of America started charging a $3 per month fee for sending check images with the bank statement. Mind you, it's not the actual cancelled checks, just the front side of the check image. I would not have minded if BofA lists the details of the checks such as payee names with each cleared check on the statement. That would have satisfied IRS. But when BofA only lists the check numbers, taxpayers need something more to substantiate a tax deduction.

by Len Penzo

Fees for this, fees for that -- even a fee for paying a fee. Where does it end? I'm afraid I know the answer ...

In this tough economy, businesses of all types are trying to nickel and dime us with add-on charges. They want you to believe these fees are necessary to cover the cost of doing business, but more often than not, they simply mislead the consumer by adding a hidden mark-up to the advertised price.

Sometimes the fees are small, but other times they can be severe. The mortgage loan industry has been doing this forever, but now the practice has spread like the plague to many other services. I can't be the only person who is outraged by this continuing practice. Or am I?

Here are eight classic fees that really gnaw at me. Some of them I do a pretty good job of avoiding. Others, not so much ...

1. Unlisted Phone Number Fees
This is arguably the granddaddy of them all. I currently get charged $1.75 per month for my unlisted telephone number -- $21 per year. Why does it cost the phone company more to keep my number out of the phone book than in it? That's a rhetorical question, but I'll answer it anyway: It doesn't.

2. Convenience Fees
I recently bought four tickets online from Ticketmaster so I could take the wife and kids to see the Harlem Globetrotters. Cost: $300 for the set. But on top of that was a "convenience charge" of $5 per ticket that added $20 to my bill. Usually, buying online saves a company money that they'd otherwise spend on a telephone operator or a store clerk. So why am I being charged to make Ticketmaster's existence more convenient?

3. Fees for Printing Tickets
I'm not done with Ticketmaster. After gagging on the $20 "convenience" charge for my Globetrotter tickets, Ticketmaster wanted to charge me $2.50 so that I could print the tickets from my home printer. Keep in mind that I also had the option to get the tickets via the postal service -- for no charge. Where's the logic in that? How much do you think it costs Ticketmaster to print the tickets on heavier stock paper, using their ticket machines, and then pay their staff to place the tickets in envelopes with the proper postage and mail it to my house? I don't know either, but I made sure that's exactly what Ticketmaster did.

4. Hotel Safe Fees
There are more than a few hotels out there that charge you just for the privilege of using their in-room safes -- whether you use it or not. Here's one hotel that charges $1.69 per night. What a joke. Whenever I see this fee, I ask to have it waived.

5. Tax e-Filing Fees

Among the most egregious fees out there are the ones that charge money for essentially doing nothing more than making a mouse click or pushing a couple of keys on a computer keyboard. How much money does it cost to send some bits of information through the Internet? Well, if you ask TurboTax, it's $36.95. That's what they charge to e-file a state tax return. So rather than printing out the return and sending it through the mail, I clenched my teeth and reluctantly paid it. Hey, if you paid attention you'll find a lesson on opportunity cost buried in there.

6. Tax Refund Fees
After spending four hours doing my taxes with the online edition of TurboTax, I was due a refund. "Perfect!" I thought, "I'll have TurboTax simply deduct what I owe them directly from my refund." Unfortunately, it turns out TurboTax charges an additional $29.95 if you choose to go that route. My only other option was to pay by credit card -- at no charge. How does that make any sense? So I paid with plastic. I hope TurboTax had to pay the credit card company an interchange fee for me using it too. Dummies.

7. Mortgage Junk Fees
There are dozens of mortgage junk fees out there, some more dubious than others, that make you scratch your head and ask what the heck is that for? Re-conveyance verification fees, commitment fees, and the infamous "warehouse fee" are just three classic examples. (I know, I already mentioned them above -- but I wanted to make it official.)

8. And Then There's This ...
It's bad enough that airlines almost universally charge fees to people who have the audacity to travel with luggage. But a while back, United, US Airways, and Delta took things a step further by charging their "valued" customers who chose to pay for their bags at the airport, rather than online, an additional fee of between $2 and $3 per bag.

That's right, folks. A fee for paying a fee.

Friday, July 8, 2011

IRS Says Summer Day Camps May Qualify for Tax Credit


The Internal Revenue Service said Wednesday that parents may be able to qualify for a tax credit to help defray the added expenses of summer day camp for their children.

Many parents who work or are looking for work must arrange for care of their children under 13 years of age during the school vacation, the IRS noted.

The Child and Dependent Care Credit is available for expenses incurred during the summer and throughout the rest of the year. However, the IRS noted that the cost of day camp may count as an expense towards the child and dependent care credit. Expenses for overnight camps do not qualify. Whether the child care provider is a sitter at the family’s home or a daycare facility outside the home, parents will get some tax benefit if they qualify for the credit.

The credit can be for up to 35 percent of the qualifying expenses, depending on the parents’ income. Parents may use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.

For more information check out IRS Publication 503, Child and Dependent Care Expenses. This publication is available at www.irs.gov or by calling (800) TAX-FORM.

The IRS also posted a link to a YouTube video from last year explaining the use of the tax credits for summer day care expenses. The tax deduction is not new, but the announcement issued Wednesday is part of a series of summertime tax tips that the IRS is emailing to subscribers this season.

NOTE: The best way to pay for child care is to use an employer's "Dependent Care Plan" or a cafeteria plan, using pre-taxed money. Make sure you do not over-estimate the cost as any unspent money is lost.

Friday, July 1, 2011

'Temporary' FUTA Surtax Expires after 35 Years

WASHINGTON, D.C. (JUNE 30, 2011)

The Federal Unemployment Tax Act surtax is set to expire Thursday after House Republicans refused to extend the 35-year-old “temporary” unemployment surtax.

The surtax has been extended eight times since it was originally enacted in 1976. House Ways and Means Committee Chairman Dave Camp, R-Mich., refused to extend the tax beyond its current June 30, 2011 expiration date.

“The death of any tax on jobs—no matter how big or small—is a historic moment and one to be celebrated,” Camp said in a statement. “The fact that it has taken 35 years for this ‘temporary’ tax to expire clearly illustrates the dangers of higher taxes—once in place, they are unlikely to ever go away. We need employers paying more salaries, not paying higher taxes. And when the surtax expires, job creators will get a little and long overdue relief.”

The original purpose of the “temporary” 0.2 percent surtax was to repay federal general revenues used to provide federal unemployment benefits paid in the wake of the 1973-75 recession. While the tax raised $27 billion (adjusted for inflation) and the general revenues were fully repaid by 1987, the 0.2 percent surtax remains on the books today. Since 1987, the tax has raised an additional $46 billion (adjusted for inflation) above and beyond what was needed at the inception of the tax in 1976.

The expiration of the surtax will reduce federal unemployment taxes by $1.4 billion per year, or about $14 per employee per year. That relief slightly offsets the effect of much larger state unemployment tax hikes imposed in recent years to pay for record unemployment benefit spending. Since unemployment benefits are not directly linked to the “temporary” federal tax, its expiration will not affect current or future unemployment benefit receipts.

Without the 0.2 percent surtax, the 6.2 percent FUTA tax rate will fall to 6.0 percent, according to CCH. It was last extended in 2009 as part of the Worker, Homeownership and Business Assistance Act.

Camp's office provided a timeline of the successive extensions of the surtax.

For more, read http://thehill.com/blogs/on-the-money/domestic-taxes/169335-temporary-unemployment-tax-to-expire--after-35-years